Sanjay S
(Chartered Accountant)
(1375 Points)
Replied 08 March 2017
I guess its like an added security.
A property eventhough mortgaged, is always vulnerable to unpredicable forces of nature. A small earthquake can turn a tall & sturdy building into rubbles in less than a minute, in which case, the bank's security suddenly ceases to exist. The guarentee is required to compensate such situations.
Anyways, the guarantee will not invoked unless there is some default in repayments.
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